The Court of Justice of the European Union (CJEU) laid down a watershed ruling on December 7, 2022, in preliminary ruling case C-566/21. This significant judgment clarified the bounds of protection granted under Directive 93/13/EEC, expressing that consumer protection should not be manipulated into a tool for acquiring economic gains or disrupting contractual equilibrium.
Understanding the Directive 93/13/EEC
The interpretation of Article 6(1) of Directive 93/13/EEC was the center of this inquiry. The article mandates:
Member States shall ensure that unfair terms used in a contract concluded with a consumer by a seller or supplier… shall, according to national law, not be binding on the consumer. Furthermore, the contract shall continue to bind the parties on those terms if it can continue in existence without the unfair terms.
In its response to the query, the CJEU essentially declared that national courts are not permitted to modify the content of an unfair contractual term that does not hinder the contract’s existence or grant the consumer an advantage, merely to fulfil the consumer’s objective.
Unveiling the CJEU’s Perspective
The central point of CJEU’s response was that legislative efforts to regulate consumer legal protection should not engender imbalances or bestow additional benefits beyond what Directive 93/13/EEC permits.
The purpose of the query was to provide an interpretation of Directive 93/13/EEC that specifically addresses disputes before national courts. The disputes revolve around Member States’ rights to meddle with the parties’ agreed terms and alter a contractual clause, specifically rights and obligations, solely to confer a financial benefit on the consumer.
The Implication of the Ruling
This ruling’s importance extends beyond unfair term disputes in CHF currency-based credit agreements. It also applies to instances where consumers explicitly request the national courts to modify contractual terms to accomplish their personal objectives.
In response to the national court’s query, the Court affirmed that a national court cannot alter an unfair term in a loan agreement in such a manner as to impose new obligations on the seller:
Article 6(1) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts must be interpreted as precluding a national court, which has found that a term in a loan agreement is unfair and whose cancellation does not hinder the contract’s continuity, from modifying the term to replace a professional’s exclusive right to convert currency under certain conditions into an obligation to do so upon the consumer’s request.
The Case and its Implications
The case at the heart of the CJEU’s analysis involved a credit agreement in Swiss francs concluded by a consumer in 2008. The challenged clause allegedly permitted the bank, but not obligated it, to unilaterally convert the loan into the national currency if the loan’s exchange rate varied by over 10% from the rate at the time of the contract signing.
The CJEU declared that allowing national courts to amend unfair terms in a credit agreement could thwart Article 7’s long-term objective of dissuading professionals from incorporating unfair terms in contracts. The Court further elaborated that even if the contract could exist without that term, Article 6(1) does not permit a national court to alter the term solely to bring an economic benefit to the consumer. Therefore, Directive 93/13/EEC does not foresee consumer benefits beyond its provided protection.
In preliminary case C-566/21, one of Romania’s largest financial banking institutions was represented by Dragne & Associates through lawyers Ion Dragne (Managing Partner), Andreia Oana Dumitrescu (Partner), and Bogdan Mihai Iordache (Managing Associate).
FAQs
Q1: What was the key finding in the CJEU’s preliminary ruling case C-566/21 related to the interpretation of Directive 93/13/EEC?
A1: The key finding in this case was that national courts cannot alter the content of an unfair term in a contract, even if it doesn’t prevent the contract from existing or create an advantage for the consumer, solely to fulfill the consumer’s aim. The judgment essentially underscored that the protection afforded to consumers under Directive 93/13/EEC shouldn’t be used as a tool for securing economic advantages or disrupting the contractual balance.
Q2: How does this ruling apply beyond disputes related to credit agreements concluded in CHF currency?
A2: The implications of this ruling are broad and apply to any situation where consumers are explicitly requesting the national courts to modify contractual terms to accomplish their objectives. This includes all types of contracts, not just those involving currency-based credit agreements. It establishes a precedent that national courts cannot alter the content of an unfair term just to provide an economic benefit to the consumer.
Q3: What does the ruling say about the role of national courts in modifying the terms of a contract?
A3: The ruling emphasizes that while national courts can identify and rule a term as unfair, they are not permitted to modify that term in a way that imposes new obligations on the seller or offers undue advantage to the consumer. This includes changing terms that allow a professional to convert currency under certain conditions into an obligation to do so upon the consumer’s request.